Income Tax Severed Letters - 2021-11-24

Ruling

2020 Ruling 2020-0838371R3 - Post-Mortem Pipeline

Unedited CRA Tags
84(2), 84.1, 245(2), 110.6(19), 83(1)

Principal Issues: 1. Does paragraph 84.1(1)(b) deem a dividend in the Proposed Transactions? 2. Does subsection 84(2) apply to the Proposed Transactions? 3. Does the GAAR apply to the Proposed Transactions?

Position: 1. Yes, but only to adjust soft ACB to hard ACB, 2. No, 3. No.

Reasons: The Proposed Transactions are in accordance with the Act, relevant jurisprudence and are consistent with our previous positions.

2020 Ruling 2020-0840631R3 F - Purpose Test in Subsection 55(2)

Unedited CRA Tags
88(2)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b)
no application of s. 55(2) because ss. 88(2)(b) and 84(2) dividends did not significantly reduce capital gains
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(2) - Paragraph 88(2)(b)
deemed ss. 88(2)(b) and 84(2) dividends on winding-up into three Holdcos

Principal Issues: Whether the taxable dividends deemed to have been paid pursuant to subsection 88(2) are subject to subsection 55(2).

Position: No.

Reasons: None of the purposes of the payment or receipt of the taxable dividends is to effect a significant reduction in the portion of the capital gain that, but for the dividend, would have been realized on a disposition at FMV of any shares of the capital stock of Opco.